First Time Home Buyer
In India, owning a home is much more than just having a piece of property, it is a source of pride, security and a symbol of financial stability. Moreover, when it is your first home, everything is more, like the excitement, your worries about increasing financial commitments and your further financial goals. Nowadays Indians are looking to invest in residential property, instead of living in rented houses as tenants.
Owning a home of their own is a big financial achievement and often the biggest motivation for people to work hard and save money. All these reasons have increased the number of first time home buyer in India. And to support and encourage the first time home buyers in India, the government is offering several benefits to the first time home buyers.
First time home buyers, especially those who come under the lower-income group (LIG) & middle-income group (MIG), often face difficulty to fund their dream home. Even in the case when they get approved for a home loan repayment for the same become difficult. Considering all these facts the Government has provided some benefits to the first time home buyer these benefits include the Pradhan Mantri Awas Yojana (PMAY) & CLSC for economically weaker sections (EWS) in 2015.
There are various sections as well as providing relief to first-time homebuyers on the payable interest on the home loan.
Benefits for the First Time Home Buyer
Under section 80C, the tax benefit can be claimed, which is up to an amount of ₹ 1.5 lakh on the repayment of the principal amount of the Home Loan.
Under section 24, tax benefit up to ₹ 2 lakh can be availed on the repayment of interest of your home loan.
This is only applicable to the self-occupied property. If one is renting his/her property, in this case, there is no maximum limit on the amount to claim a tax deduction. Hence, one can claim the entire interest amount or can claim even if the amount exceeds ₹ 2 lakh.
Under this section, a first time home buyer can avail a tax deduction of ₹ 50,000 as a tax benefit on the interest repayment.
The Pradhan Mantri Awas Yojana (PMAY)
“Housing for All” Mission for the urban is under progress and it will be completely implemented during 2015-2022. With the Mission to provide housing for all.
PMAY was started on December 31 gives first-time home buyers subsidy. This makes it more affordable for lower & middle-class people to own their dream home. The subsidy is provided at different rates depending on the income of the people. A person having income up to ₹18 lakhs can avail this subsidy.
For annual income below ₹ 6 lakh, the subsidy is 6.5 percentage points on a principal component of ₹ 6 lakh, this is regardless of their total home loan.
For income up to ₹ 12 lakh, the subsidy is 4 percentage points on a principal component of ₹ 9 lakh.
The highest income category eligible for the subsidy, which is people up to the annual income of ₹ 18 lakh, the subsidy is 3 percentage points on a principal component of ₹ 12 lakh.
Maximum subsidy-eligible under CLSS-MIG(I) – ₹ 2.35 lakhs (approx.)
Maximum subsidy-eligible under CLSS-MIG(II) – ₹ 2.30 lakhs (approx.)
The Indian real estate market on a boom currently, making it the perfect investment time for those who have not yet invested in real estate. Investment in real estate gives almost guaranteed returns. Rapid improvements in infrastructural developments and the introduction of these schemes and benefits applicable to the purchase of the first home makes people more eligible and housing more affordable for the common masses.